The number of companies in Scotland that are facing “critical” financial challenges has risen dramatically in the final quarter of 2011, according to a new report.
This is the conclusion following the latest Red Flag Alert data by Begbies Traynor, a business recovery specialist, which puts the number of firms at financial risk at nearly six thousand.
The majority of these 5,916 companies were at the less serious level of “significant” distress; a number which has in fact fallen since the same period in 2010.
However, the real worry for Scottish companies is the 16% increase in companies facing “critical” business distress; though this is better than the 24% increase the UK has seen on average.
The changes have been in many ways expected, with public sector cuts and commercial finance in Scotland increasingly hard to come by. The pace has been slowed, in part at least, with the trend for factoring here though, but still the pace of change has surprised the analysts compiling the report, with one saying:
“We had expected the impact … in Scotland to lag behind the rest of the UK, but we appear to be feeling the knock-on effect through the wider economy.”
Begbies Traynor also went on to say they expected a progressive increase in these figures throughout 2012.
One of the largest hit sectors in Scotland has been in the construction industry, where distress figures have risen by 12%. However, throughout the whole of the UK, the retail sector continues to suffer disproportionately.